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SS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number: 001-37923

 

CRISPR THERAPEUTICS AG

(Exact name of Registrant as specified in its charter)

 

 

Switzerland

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

Baarerstrasse 14

6300 Zug, Switzerland

Not Applicable

(Address of principal executive offices)

(zip code)

+41 (0)41 561 32 77

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, CHF 0.03 par value

CRSP

NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES      NO  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

Accelerated filer

  

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  

As of July 25, 2019, there were 54,662,539 shares of registrant’s common shares outstanding.

 

 

 


Index

 

 

Page

Number

PART I: FINANCIAL INFORMATION

 

 

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2019 and 2018

3

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2019 and 2018

4

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

5

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

25

 

 

Item 4. Controls and Procedures

25

 

 

PART II: OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

25

 

 

Item 6. Exhibits

26

 

 

SIGNATURES

27

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CRISPR Therapeutics AG

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share and per share data)

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

427,885

 

 

$

456,649

 

Accounts receivable, including related party amounts of $321 and $88 as of

   June 30, 2019 and December 31, 2018, respectively

 

 

321

 

 

 

88

 

Prepaid expenses and other current assets, including related party amounts of $3,318 and

   $3,417 as of June 30, 2019 and December 31, 2018, respectively

 

 

10,267

 

 

 

9,658

 

Total current assets

 

 

438,473

 

 

 

466,395

 

Property and equipment, net

 

 

20,156

 

 

 

18,500

 

Intangible assets, net

 

 

262

 

 

 

289

 

Restricted cash

 

 

3,915

 

 

 

3,163

 

Operating lease assets

 

 

30,770

 

 

 

 

Other non-current assets

 

 

669

 

 

 

669

 

Total assets

 

$

494,245

 

 

$

489,016

 

Liabilities and shareholders’ equity

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,143

 

 

$

5,069

 

Accrued expenses, including related party amounts of $3,312 and $1,700 as of June 30, 2019

   and December 31, 2018, respectively

 

 

18,628

 

 

 

20,852

 

Accrued tax liabilities

 

 

542

 

 

 

402

 

Deferred rent

 

 

 

 

 

1,202

 

Operating lease liabilities

 

 

4,880

 

 

 

 

Other current liabilities

 

 

219

 

 

 

221

 

Total current liabilities

 

 

31,412

 

 

 

27,746

 

Deferred revenue non-current, including related party amounts of $57,730 and $57,780 as of

   June 30, 2019 and December 31, 2018, respectively

 

 

57,730

 

 

 

57,780

 

Deferred rent non-current

 

 

 

 

 

11,052

 

Operating lease liabilities, net of current portion

 

 

37,200

 

 

 

 

Other non-current liabilities

 

 

220

 

 

 

243

 

Total liabilities

 

 

126,562

 

 

 

96,821

 

Commitments and contingencies, see Note 4

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares, CHF 0.03 par value, 55,445,241 and 52,183,139 shares authorized at

   June 30, 2019 and December 31, 2018, respectively, 53,756,046 and 52,160,798 shares

   issued at June 30, 2019 and December 31, 2018, respectively, 53,499,057 and

   51,852,862 shares outstanding at June 30, 2019 and December 31, 2018, respectively,

   23,948,128 and 20,498,996 shares in conditional capital at June 30, 2019 and

   December 31, 2018, respectively.

 

 

1,630

 

 

 

1,584

 

Treasury shares, at cost, 256,989 and 307,936 shares at June 30, 2019 and December 31, 2018, respectively

 

 

(57

)

 

 

(57

)

Additional paid-in capital

 

 

759,796

 

 

 

682,245

 

Accumulated deficit

 

 

(393,676

)

 

 

(291,569

)

Accumulated other comprehensive loss

 

 

(10

)

 

 

(8

)

Total shareholders' equity

 

 

367,683

 

 

 

392,195

 

Total liabilities and shareholders’ equity

 

$

494,245

 

 

$

489,016

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2


 

CRISPR Therapeutics AG

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited, in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Collaboration revenue (1)

 

$

318

 

 

$

1,088

 

 

$

646

 

 

$

2,446

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (2)

 

 

39,533

 

 

 

25,633

 

 

 

73,355

 

 

 

45,152

 

General and administrative

 

 

15,768

 

 

 

12,741

 

 

 

30,697

 

 

 

21,577

 

Total operating expenses

 

 

55,301

 

 

 

38,374

 

 

 

104,052

 

 

 

66,729

 

Loss from operations

 

 

(54,983

)

 

 

(37,286

)

 

 

(103,406

)

 

 

(64,283

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from equity method investment

 

 

(1,012

)

 

 

(1,153

)

 

 

(2,037

)

 

 

(2,244

)

Other income (expense), net

 

 

2,381

 

 

 

155

 

 

 

3,506

 

 

 

29

 

Total other income (expense), net

 

 

1,369

 

 

 

(998

)

 

 

1,469

 

 

 

(2,215

)

Net loss before income taxes

 

 

(53,614

)

 

 

(38,284

)

 

 

(101,937

)

 

 

(66,498

)

Provision for income taxes

 

 

(85

)

 

 

(96

)

 

 

(170

)

 

 

(182

)

Net loss

 

 

(53,699

)

 

 

(38,380

)

 

 

(102,107

)

 

 

(66,680

)

Foreign currency translation adjustment

 

 

(10

)

 

 

(21

)

 

 

(2

)

 

 

(9

)

Comprehensive loss

 

$

(53,709

)

 

$

(38,401

)

 

$

(102,109

)

 

$

(66,689

)

Reconciliation of net loss to net loss attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(53,699

)

 

$

(38,380

)

 

$

(102,107

)

 

$

(66,680

)

Net loss per share attributable to common shareholders—basic and diluted

 

$

(1.01

)

 

$

(0.82

)

 

$

(1.94

)

 

$

(1.44

)

Weighted-average common shares outstanding used in net loss per share attributable to

   common shareholders—basic and diluted

 

 

53,188,041

 

 

 

46,842,316

 

 

 

52,643,649

 

 

 

46,362,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Including the following revenue from a related party, see Notes 6 & 11:

 

$

318

 

 

$

881

 

 

$

646

 

 

$

1,963

 

(2) Including the following research and development expense with a related party, see Notes 6 & 11:

 

$

6,870

 

 

$

1,246

 

 

$

14,459

 

 

$

2,352

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

3


 

 

CRISPR Therapeutics AG

Consolidated Statements of Shareholders’ Equity

(In thousands, except share and per share data)

 

 

Common Shares

 

Treasury Shares

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Shares

 

CHF 0.03

Par Value

 

Shares

 

Amount,

at cost

 

Additional

Paid-in

Capital

 

Accumulated

Deficit

 

Other

Comprehensive

Income (Loss)

 

Total Shareholders’

Equity

 

Balance at December 31, 2017

 

40,592,248

 

 

1,240

 

 

444,873

 

 

 

 

312,018

 

 

(125,440

)

 

14

 

 

187,832

 

Cumulative effect of ASC 606 adoption

 

 

 

 

 

 

 

 

 

 

 

(1,148

)

 

 

 

(1,148

)

Issuance of common shares, net of issuance costs of $8.2 million

 

5,750,000

 

 

174

 

 

 

 

 

 

122,423

 

 

 

 

 

 

122,597

 

Vesting of restricted shares

 

10,042

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Exercise of vested options

 

328,525

 

 

9

 

 

(6,253

)

 

 

 

2,647

 

 

 

 

 

 

2,656

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

6,673

 

 

 

 

 

 

6,673

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

12

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(28,300

)

 

 

 

(28,300

)

Balance at March 31, 2018

 

46,680,815

 

$

1,423

 

 

438,620

 

$

 

$

443,774

 

$

(154,888

)

$

26

 

$

290,335

 

Issuance of common shares, net of issuance costs of $0.0M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Vesting of restricted shares

 

10,043

 

 

1

 

 

 

 

 

 

13

 

 

 

 

 

 

14

 

Exercise of vested options

 

380,977

 

 

11

 

 

(29,259

)

 

(50

)

 

3,768

 

 

 

 

 

 

3,729

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

9,477

 

 

 

 

 

 

9,477

 

Other Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

(21

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(38,380

)

 

 

 

(38,380

)

Balance at June 30, 2018

 

47,071,835

 

$

1,435

 

 

409,361

 

$

(50

)

$

457,032

 

$

(193,268

)

$

5

 

$

265,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

51,852,862

 

 

1,584

 

 

307,936

 

 

(57

)

 

682,245

 

 

(291,569

)

 

(8

)

 

392,195

 

Issuance of common shares, net of issuance costs of $1.2 million

 

631,580

 

 

 

 

 

 

 

 

23,472

 

 

 

 

 

 

23,472

 

Vesting of restricted shares

 

9,288

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Exercise of vested options

 

141,915

 

 

5

 

 

 

 

 

 

1,827

 

 

 

 

 

 

1,832

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

10,696

 

 

 

 

 

 

10,696

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(48,408

)

 

 

 

(48,408

)

Balance at March 31, 2019

 

52,635,645

 

 

1,589

 

 

307,936

 

 

(57

)

 

718,255

 

 

(339,977

)

 

 

 

379,810

 

Issuance of common shares, net of issuance costs of $1.3 million

 

732,108

 

 

40

 

 

(47,297

)

 

 

 

28,074

 

 

 

 

 

 

28,114

 

Vesting of restricted shares

 

12,317

 

 

1

 

 

 

 

 

 

15

 

 

 

 

 

 

16

 

Exercise of vested options

 

118,987

 

 

 

 

(3,650

)

 

 

 

1,254

 

 

 

 

 

 

1,254

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

12,198

 

 

 

 

 

 

12,198

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

(10

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(53,699

)

 

 

 

(53,699

)

Balance at June 30, 2019

 

53,499,057

 

 

1,630

 

 

256,989

 

 

(57

)

 

759,796

 

 

(393,676

)

 

(10

)

 

367,683

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

4


 

CRISPR Therapeutics AG

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(102,107

)

 

$

(66,680

)

Reconciliation of net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,010

 

 

 

1,691

 

Equity-based compensation

 

 

20,857

 

 

 

13,906

 

Loss from equity method investment

 

 

2,037

 

 

 

2,244

 

Other income, non-cash

 

 

 

 

 

(169

)

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(233

)

 

 

1,682

 

Prepaid expenses and other assets

 

 

(1,399

)

 

 

(3,804

)

Accounts payable and accrued expenses

 

 

(849

)

 

 

3,764

 

Deferred revenue

 

 

(50

)

 

 

(244

)

Deferred rent

 

 

 

 

 

(381

)

Operating lease assets and liabilities

 

 

(391

)

 

 

 

Other liabilities, net

 

 

6

 

 

 

88

 

Net cash used in operating activities

 

 

(80,119

)

 

 

(47,903

)

Investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(3,271

)

 

 

(1,078

)

Net cash used in investing activities

 

 

(3,271

)

 

 

(1,078

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common shares, net of issuance costs

 

 

52,294

 

 

 

122,597

 

Proceeds from exercise of options

 

 

3,086

 

 

 

6,433

 

Repurchase of treasury shares

 

 

 

 

 

(50

)

Net cash provided by financing activities

 

 

55,380

 

 

 

128,980

 

Effect of exchange rate changes on cash

 

 

(2

)

 

 

(9

)

(Decrease) increase in cash

 

 

(28,012

)

 

 

79,990

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

459,812

 

 

 

242,912

 

Cash, cash equivalents and restricted cash, end of period

 

$

431,800

 

 

$

322,902

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Property and equipment purchases in accounts payable and accrued expenses

 

$

702

 

 

$

125

 

Equity issuance costs in accounts payable and accrued expenses

 

$

477

 

 

$

 

 

 

 

As of June 30,

 

Reconciliation to amounts within the condensed consolidated balance sheets

 

2019

 

 

2018

 

Cash and cash equivalents

 

$

427,885

 

 

$

319,737

 

Restricted cash

 

 

3,915

 

 

 

3,165

 

Cash, cash equivalents and restricted cash at end of period

 

 

431,800

 

 

 

322,902

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

5


 

CRISPR Therapeutics AG

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment, which is the business of discovering, developing and commercializing therapies derived from or incorporating genome-editing technology. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the three and six month interim periods ended June 30, 2019 and 2018.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2018, which are contained in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses and equity-based compensation expense. The Company bases its estimates on historical experience and various other assumptions, including, in certain circumstances, future projections that management believes to be reasonable. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2019 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2018 Annual Report on Form 10-K filed with the SEC on February 25, 2019, except with respect to the Company’s lease accounting policy noted within the “Recently adopted accounting standards” section below.

Recently Adopted Accounting Standards

The Company adopted ASC 842, Leases (“ASC 842”), using the required modified retrospective approach, effective January 1, 2019. The Company chose to apply the transition provisions as of the period of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company to carry forward the historical lease classification. In addition, the Company elected the practical expedient not to apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that it is reasonably certain to exercise) and the practical expedient that permits lessees to make an accounting policy election (by class of underlying asset) to account for each separate lease component of a contract and its associated non-lease components as a single lease component. The adoption of the new standard resulted in the recording net lease assets and lease liabilities of $26.1 million and $37.6 million, respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities is primarily due to the change in classification of lease incentives from liabilities to a reduction in our net lease assets. The standard had no impact on our net loss or cash flows.

 

6


 

Impact of Adopting ASC 842 on the Financial Statements

 

 

 

January 1, 2019

Prior to ASC 842 Adoption

 

 

ASC 842 Adjustment

 

 

January 1, 2019

As Adjusted

 

Consolidated Balance Sheet Data (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets(1)

 

$

9,658

 

 

$

(553

)

 

$

9,105

 

Operating lease assets(2)

 

$

 

 

$

26,087

 

 

$

26,087

 

Deferred rent(3)(4)